Resale-price maintenance refers to the practice of a manufacturer requiring retailers to sell their product at a uniform price, thereby eliminating competition. This practice is prohibited by antitrust law. However, a manufacturer can still propose a retail price without exerting pressure on retailers to comply. It is crucial to foster fair competition in the market, as price-fixing can have detrimental effects on the economy.
Resale-price maintenance refers to a form of price-fixing in which a manufacturer compels or persuades various retailers to sell their product at an identical price, thereby eradicating competition. This practice is deemed illegal under antitrust law; however, a manufacturer can propose a retail price without coercing retailers to adhere to it. For instance, an electronics manufacturer enforces a uniform selling price for their products across all retailers, thereby preventing any competition among them. Similarly, a clothing brand convinces multiple retailers to sell their products at a predetermined price, thereby eliminating price competition and ensuring consistent pricing across different stores. These instances exemplify how resale-price maintenance can detrimentally impact competition and restrict consumer choice by compelling retailers to sell products at a fixed price, irrespective of market conditions or consumer demand.
Resale-price maintenance refers to an agreement between a manufacturer and its retailers, where the manufacturer sets a minimum price at which the retailers must sell the product.
Resale-price maintenance is generally considered illegal under antitrust laws, as it can restrict competition and lead to higher prices for consumers. However, there are certain exceptions and circumstances where it may be deemed legal.
Some exceptions to the illegality of resale-price maintenance include situations where the manufacturer can demonstrate that the practice promotes competition, enhances product quality, or prevents free-riding by retailers.
No, a manufacturer cannot directly enforce resale-price maintenance on its retailers. However, they can use indirect methods such as withholding supply or terminating contracts to indirectly influence the retailers’ pricing decisions.
Retailers can voluntarily agree to resale-price maintenance, but they need to be cautious as it may still be considered illegal under antitrust laws. Retailers should seek legal advice before entering into such agreements.
Engaging in resale-price maintenance can lead to severe penalties, including fines, injunctions, and damage claims. It can also harm a company’s reputation and relationships with retailers.
Consistent pricing alone is not a sufficient justification for resale-price maintenance. Antitrust laws prioritize competition and consumer welfare over uniform pricing, so other justifications must be present to make it legal.
Enforcing resale-price maintenance on third-party sellers on online platforms is generally considered illegal. Online platforms are expected to promote competition and allow sellers to set their own prices.
While resale-price maintenance is generally disfavored, there may be specific industries or markets where it is deemed legal due to unique circumstances or industry-specific regulations. However, such cases are rare.
To ensure compliance, businesses should seek legal advice, establish clear policies against resale-price maintenance, educate employees about antitrust laws, and regularly monitor and enforce compliance within their organisation.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 16th April 2024.
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